Interest Rate Update

Declining Housing MarketIn the latest interest rate update, the Reserve Bank Board decided to leave official cash rates at 2.0% at this weeks monetary policy meeting. In his statement accompanying the release Governor Glen Steven flagged the uncertainty in global markets and the slow down in global growth ,

“the global economy is continuing to grow, though at a slightly lower pace than earlier expected.”

In the weeks ahead we should see markets stabilise and other central banks keep monetary policy very accommodative. It is hard to see Australian Official rates moving higher anytime in the foreseeable future. In fact it is more likely to see the Reserve Bank having to cut official rates as China continues to slow and Australian domestic demand languishes.

It’s pretty clear that Sydney property prices have now peaked. It’s also becoming increasingly evident that Chinese investment into Australia is the only factor keeping the domestic economy out of a recession. Should the inflow of Chinese cash stop we will see a recession over the course of 2016.

“by Shane Clinton”

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